Business Highlights

NEW YORK (AP) - The parent company of the New York Stock Exchange said Tuesday that it will combine with the operator of the Frankfurt stock exchange to create the world's largest financial markets company.

The new company, a combination of NYSE Euronext Inc. and Deutsche Boerse, will have dual headquarters in Frankfurt and New York. NYSE Euronext's CEO Duncan Niederauer will be chief executive, and Deutsche Boerse' CEO Reto Francioni will become chairman.

No name for the combined company was announced. The new company will own exchanges in New York, Frankfurt, Paris, Amsterdam and other cities that will continue to operate under their existing names.

Deutsche Boerse shareholders will own 60 percent of the new company. Shareholders of NYSE Euronext will own the rest. The company will be reincorporated in the Netherlands and will be listed in Frankfurt, New York and Paris.

NYSE Euronext's revenues have fallen because of competition from cheaper computerized stock exchanges in the U.S. and Europe. Many other global stock exchanges have also combined to save costs. The deal is expected to lead to $400 million in savings, mainly from technology and clearing costs.

The deal will give NYSE Euronext a larger footprint in the more lucrative business of trading in futures and options contracts.

The boards of both exchange owners have signed off on the deal, but it must still be approved by shareholders and regulators.

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Businesses and consumers give economy boost

WASHINGTON (AP) - American businesses and consumers are giving the economy a boost by spending more, but the troubled housing market remains an obstacle, new data show.

Consumers bought more from retailers for a seventh straight month in January. The gains came despite snowstorms that limited spending from workers with more money in their paychecks from a Social Security tax cut.

Businesses increased their stockpiles in every month last year, a sign that companies expect sales to remain healthy.

Still, the view of the housing market among homebuilders hasn't changed in four months, suggesting weak home sales will drag on the economy throughout the year.

Chris Christopher, an economist at IHS Global Insight, said consumer spending will likely continue to increase over the next few months. But he predicts it will happen more slowly than at the end of last year, even with workers taking home more pay from the tax cut.

Retail sales rose 0.3 percent last month to $381.6 billion, the Commerce Department said Tuesday. Sales have risen more than 14 percent from the recession low in December 2008.

People spent more at department stores and on electronics while also paying higher prices for gas. Online sales increased at a healthy pace.

Still, the harsh winter weather - which brought many cities in the Southeast to a standstill for days - slowed traffic at restaurants and building supply stores. Americans also spent less on clothing and furniture.

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US deficit is biggest share of economy since 1945

WASHINGTON (AP) - Not since World War II has the federal budget deficit made up such a big chunk of the U.S. economy. And within two or three years, economists fear the result could be sharply higher interest rates that would slow economic growth.

The budget plan President Barack Obama sent Congress on Monday foresees a record deficit of $1.65 trillion this year. That would be just under 11 percent of the $14 trillion economy - the largest proportion since 1945, when wartime spending swelled the deficit to 21.5 percent of U.S. gross domestic product.

The danger is that a persistently large gap in the budget could threaten the economy. Investors would see lending their money to the U.S. as riskier. So they'd demand higher returns to do it. Or they'd simply put their cash elsewhere. Interest rates on mortgages and other debt would rise as a result.

And if borrowing turned more expensive, people and businesses might scale back their spending. That would weaken an economy still struggling to lower unemployment, revive real estate prices and restore corporate and consumer confidence.

So far, it hasn't happened. It's still cheap for the government to borrow money and finance deficits. But economists fear the domino effect if all that changes.

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China reduces US debt holdings in December

WASHINGTON (AP) - China, the biggest buyer of U.S. Treasury securities, reduced its holdings in December for the second straight month.

China's holdings of Treasury debt dropped 0.4 percent to $892 billion, the Treasury Department said Tuesday. The declines follow four months of increases. China's ownership of U.S. government debt is slightly below the $895 billion it held a year ago.

Overall, foreign holdings of Treasury securities rose 0.6 percent $4.37 trillion. Britain and Japan ramped up their purchases of U.S. government debt in December. That suggests overseas governments and private investors are still willing to buy U.S. government debt.

The U.S. government is selling huge amounts of debt to finance record-high deficits. This year's deficit is forecast to reach $1.65 trillion this year, the highest ever. Last year the government posted a $1.3 trillion deficit.

Overseas demand for Treasurys helps lower the interest rate the U.S. government pays on its debt. If the United States had to finance its debt through U.S. investors alone, the government would have to pay higher rates. American companies and consumers would also pay higher rates.

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World Bank: Food prices at "dangerous levels"

ST. LOUIS (AP) - Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

The bank released a report Tuesday that said global food prices have jumped 29 percent in the past year, and are just 3 percent below the all-time peak hit in 2008. Bank President Robert Zoellick said the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.

The World Bank estimates higher prices for corn, wheat and oil have pushed 44 million people into extreme poverty since last June.

The report comes a day before Finance ministers and central bank chiefs from the Group of 20 leading economies meet in Paris. Zoellick said he's worried some countries might react to food inflation by banning exports or implementing price controls, which would just aggravate the problem.

The World Bank's food price index rose by 15 percent between October and January alone. The increase has been driven by volatile global trading in wheat, corn and soybeans. Global corn futures more than doubled since this summer, from $3.50 to $7 a bushel, in part because of higher demand from developing countries and a growing biofuels industry.

Prices are rising in part because global grain traders have gotten jittery about historically low reserve levels of corn, wheat and soybeans, said Chris Nagel, an analyst with Northstar Commodity in Minneapolis. Growing demand from customers in China and elsewhere is putting pressure on the supply of most commodities, he said.

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Dim view of housing market weighs on economy

WASHINGTON (AP) - Optimism is in short supply among U.S. homebuilders, a sign that the depressed housing market will slow the economy's gains this year.

The outlook by builders hasn't improved since the fall, when new-home sales were in the midst of their bleakest year in a half-century.

Less home building means fewer jobs for the economy. Construction work now accounts for about 5 percent of the nation's private employment. But nearly 2 million of the roughly 14 million unemployed Americans previously worked in construction.

Analysts say the economy needs to accelerate job creation before the housing industry can fully recover. Without more jobs and higher wages, home sales will stagnate.

The National Association of Home Builders' index of builder sentiment for February was unchanged for the fourth straight month, at 16, the association said Tuesday. Any reading below 50 indicates negative sentiment. The index hasn't topped 50 since April 2006.

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Dell 4Q net income more than doubles

SEATTLE (AP) - Personal computer maker Dell Inc. said Tuesday its net income more than doubled in the most recent quarter, as businesses spent more on computers, servers and other technology.

Net income soared to $927 million, or 48 cents per share, from $334 million, or 17 cents per share, a year earlier.

Revenue rose 5 percent to $15.69 billion from $14.9 billion in the year-ago quarter. That's less than the $15.75 billion analysts predicted.

Dell has been working to increase the proportion of server computers, data storage devices and technology consulting services it sells, because those areas are more profitable than the basic PC business. Compared with a year ago, however, each of Dell's product categories accounted for about the same amount of revenue.

Revenue from large enterprises and from small and medium-size businesses rose 12 percent each to $4.7 billion and $3.7 billion, respectively.

Those increases helped Dell offset sluggish consumer spending on computers. Revenue from the consumer segment fell 8 percent to $3.3 billion. A year ago, Microsoft Corp.'s updated PC operating system, Windows 7, went on sale. In an interview, Dell Chief Financial Officer Brian said that he expects the computer business will remain weak this fiscal year, in part as people contemplate buying tablets such as Apple Inc.'s iPad.

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Home Depot to add more than 60,000 seasonal jobs

ATLANTA (AP) - Never mind the snow. Home Depot Inc. is ramping up for spring, with plans to hire more than 60,000 seasonal workers to help with its busiest season of the year.

Spokeswoman Jean Niemi said the seasonal staffing level is on pace with last year, when its Spring Black Friday promotion first started. With the promotion heading into its second straight year, the world's biggest home improvement retailer is looking to fill its seasonal positions prior to the event.

Consumers typically head to home improvement stores in the spring to pick up flowers, vegetables and lawn care products as they prepare for the summer. Home Depot's Spring Black Friday promotion, which will occur over four different weekends, will be rolled out in various markets and timed to weather conditions.

Many retailers hire seasonal help during their busiest selling seasons. Companies including Kohl's Corp., Macy's Inc. and Toys R Us boosted their staffing levels during the December holidays to keep up with customer demand for clothing, toys and other items.

Home Depot said its seasonal workers, which will be hired and trained in February and March, will be in every market. The Atlanta company currently has more than 300,000 employees.

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Delta, American boost some air fares by up to $120

DALLAS (AP) - Major U.S. airlines are raising the price of some tickets favored by business travelers again, this time by up to $120 per round trip.

Fare experts said Delta started the latest increase on Monday, which was matched immediately by American and a day later by United, Continental and US Airways.

It's the second big increase in fares in as many weeks. The airlines' fuel prices have risen 50 percent over the past year. They eliminated many flights when they were losing money in 2008 and 2009, which has given them the power to raise fares now that planes are more crowded and travel demand is rebounding.

JP Morgan analyst Jamie Baker said it made sense for the big airlines to target corporate travelers, who are considered less sensitive to price increases. He said airlines may have raised vacation fares as high as they can without causing a loss of revenue - presumably by driving away budget-conscious customers.

American Airlines spokesman Ed Martelle said the increases covered first-class, business-class and tickets purchased up to seven days before travel. Flights up to 500 miles were boosted $20 each way, those from 501 to 1,500 miles were raised $40 each way, and flights longer than 1,500 miles increased by $60 each way, he said.

Delta Air Lines Inc. confirmed the fare hike but declined to give a reason. United, Continental and US Airways confirmed that they too raised prices.

Last week, United and Continental, owned by United Continental Holdings Inc., led an increase of $20 to $60 per round trip on pricey tickets typically bought by business travelers. Delta and American both matched that hike last week.

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Bank of England under pressure over inflation

LONDON (AP) - The Bank of England's credibility was called into question on Tuesday after official data showed that inflation surging well above the central bank's stated target.

Britain's Office for National Statistics revealed that the country's key inflation rate rose to 4 percent in January, double the official target and prompting a public explanation from bank governor Mervyn King.

King and a number of other policymakers on the bank's nine-strong Monetary Policy Committee have insisted the stubbornly high cost of living is due to temporary price shocks, such as soaring global commodity prices, a fall in the value of sterling, and a rise in sales tax last month.

Prices are continuing to rise even as the economy struggles - gross domestic product shrank by 0.5 percent in the fourth quarter.

At least two members of the committee, which got an advance glimpse of the inflation figures for last week's policy meeting, backed a modest hike in interest rates from a record low 0.5 percent to 0.75 percent. But King and the majority argued that higher rates would be ineffective against the external factors driving the price rises.

The Statistics Office said the largest factors in the latest increase were the higher price of oil and an increase in the broad-based sales tax from 17.5 percent to 20 percent. Excluding the tax hike, consumer inflation rose from 2 percent in December to 2.4 percent in January, partially backing King's stance.

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The Dow Jones industrial average fell 41.55, or 0.3 percent, to close at 12,226.64. That's only the third day this month the Dow has closed lower.

Benchmark West Texas Intermediate crude fell 49 cents to settle at $84.32 a barrel on the New York Mercantile Exchange. In London, Brent crude fell $1.44 to settle at $102.29 a barrel on the ICE Futures exchange.

In other Nymex trading in March contracts, heating oil fell 2.14 cents to settle at $2.7290 a gallon and gasoline lost 2.86 cents to settle at $2.4888 a gallon. Natural gas rose 5.1 cents to settle at $3.976 per 1,000 cubic feet.